New free-to-own GameFi model is “high-risk” according to CZ
The blockchain gaming firm in question raised over $200 million on Monday to further its NFT operations.
Changpeng Zhao (CZ), CEO of Binance, criticized the creation of a novel “free-to-own” business model in the GameFi space on Tuesday, writing:
“If everything will be free in the world, why do we have to work so hard…”
The Binance CEO then explained that nothing is absolutely free, pointing to how the exchange can offer zero trading fees for Bitcoin and Ether pairs because of adequate revenue generated from other trading pairs. He added that new projects that are free to sign-up can come at high risks from being early adopters.
The firm facing the brunt of CZ’s criticism is gaming startup Limit Break, which raised $200 million in venture capital funding on Aug 29. The project gained popularity with the launch of a free-mint NFT collection called DigiDaigaku.
At inception, the community is able to begin for free, possessing ownership of NFTs that, in turn, act as factories to generate new NFTs for gameplay and cosmetics. The idea is that since the NFTs are given for free, players aren’t pressured to recoup the cost of their investment as quickly as possible, and can therefore stay and play the game for much longer.
Ryan Foo, game economist at Delphi Digital, said that Limit Break only takes a 10% transaction fee on NFTs. In the weeks since the NFTs’ release, approximately 3,900 Ether worth of collectibles has been traded, resulting in a book revenue of $600k+.
In recent months, blockchain games have faced severe criticism from gaming industry veterans for their focus on “making money” instead of enjoyment. For example, Mojang Studios, creator of Minecraft, said that it would ban NFT integrations, citing “speculative pricing” and “investment mentality” that take away from the game experience.
FREE-TO-OWN
The new web3 model that will change game monetization forever.
Breaking down @limitbreak ‘s and @DigiDaigaku 200M raise: pic.twitter.com/0tBSRpv7se
— Ryan {} (@0xRyze) August 29, 2022
